The Technology & Economic Forum is a venue to discuss issues pertaining to Technological and Economic developments in India. We request members to kindly stay within the mandate of this forum and keep their exchanges of views, on a civilised level, however vehemently any disagreement may be felt. All feedback regarding forum usage may be sent to the moderators using the Feedback Form or by clicking the Report Post Icon in any objectionable post for proper action. Please note that the views expressed by the Members and Moderators on these discussion boards are that of the individuals only and do not reflect the official policy or view of the Bharat-Rakshak.com Website. Copyright Violation is strictly prohibited and may result in revocation of your posting rights - please read the FAQ for full details. Users must also abide by the Forum Guidelines at all times.

India's trade gap rose to USD 16.6 billion in June of 2018 from USD 12.96 billion a year earlier. It is the highest trade deficit since May of 2013. Imports surged 21.3% year-on-year to USD 44.3 billion, reaching the highest value since January of 2013 as a 60.5% rise in oil prices led to a higher bill for petroleum, crude and products (56.6%). Imports also increased for machinery, electrical and non-electrical (9.1%); coal, coke and briquettes (27%); organic and inorganic chemicals (24.3%); and electronic goods (14.3%) while gold imports fell 2.8%. Exports rose 17.6% to USD 27.7 billion, also due to sales of petroleum products (52.5%); organic and inorganic chemicals (30.3%); drugs and pharmaceuticals (14.7%); engineering goods (14.2%) and gems and jewelry (2.7%).

chola wrote:But Yensoy is right in that PPP is really meaningless to global corporations. It might make sense for local planning.

But in the end, you use pure sales figures over any gross national produce numbers anyways.

You're making the same mistake yensoy is. PPP is not a measure that's applied to corporate transactions in isolation. It's a means of normalizing price differentials between goods and services across a broad economy. I don't see anything analogous in saying 'I prefer sales data over PPP'; they are two very different things and sounds like 'I prefer eating ice cream to popping acne'.

What's even more strange is arguing that per-capita GDP figures are more meaningful than aggregate ones. I appreciate the basis of that claim, but not the manner in which it is applied. Some macro parameters only make sense as per-capita data. For example, caloric intake. This is always listed in calories per head. No one ever says "India's gross caloric intake rose 12% to 5 trillion calories in 2017-18 on the back of bumper harvest. This moves the country closer to the overweight category, which is defined as a gross body mass of 60 billion kg." On the other hand, some stats only make sense as aggregate figures. No one posts "This week, India's foreign exchange reserves rose by $2/person to a record $420 per person" .

However, GDP is literally gross domestic product. It's primarily an aggregate parameter, but is also listed in per capita terms. There's no point in arguing that GDP - nominal or PPP 'only makes sense as a per capita measure' . That is ones privilege to prefer to look at only one of the two, but GDP is and has always been presented as a two part figure - a gross figure AND a per capita figure. They both matter, and they always have.

chola wrote:But Yensoy is right in that PPP is really meaningless to global corporations. It might make sense for local planning.

But in the end, you use pure sales figures over any gross national produce numbers anyways.

You're making the same mistake yensoy is. PPP is not a measure that's applied to corporate transactions in isolation. It's a means of normalizing price differentials between goods and services across a broad economy. I don't see anything analogous in saying 'I prefer sales data over PPP'; they are two very different things and sounds like 'I prefer eating ice cream to popping acne'.

What's even more strange is arguing that per-capita GDP figures are more meaningful than aggregate ones. I appreciate the basis of that claim, but not the manner in which it is applied. Some macro parameters only make sense as per-capita data. For example, caloric intake. This is always listed in calories per head. No one ever says "India's gross caloric intake rose 12% to 5 trillion calories in 2017-18 on the back of bumper harvest. This moves the country closer to the overweight category, which is defined as a gross body mass of 60 billion kg." On the other hand, some stats only make sense as aggregate figures. No one posts "This week, India's foreign exchange reserves rose by $2/person to a record $420 per person" .

However, GDP is literally gross domestic product. It's primarily an aggregate parameter, but is also listed in per capita terms. There's no point in arguing that GDP - nominal or PPP 'only makes sense as a per capita measure' . That is ones privilege to prefer to look at only one of the two, but GDP is and has always been presented as a two part figure - a gross figure AND a per capita figure. They both matter, and they always have.

Nope, I am agreeing with Yensoy that PPP is meaningless to corporate CEO or businessman because it has no relationship to the purchasing power of the population. No more, no less.

Supratik wrote:No you are wrong. Domestic consumption is based on PPP. Only imported and commodities depend on exchange rate and nominal GDP.

No, it is not. I already gave you the example of our PPP being nearly half of what Cheen’s is but our sales of durable and white goods are far from being one-half of theirs. If you are a CEO of an auto firm and you used PPP as a gauge for India vis a vis the PPP of Cheen you would project a market of 12M which is 300% off from the actual market of 4M sold in India last year.

Supratik wrote:No you are wrong. Domestic consumption is based on PPP. Only imported and commodities depend on exchange rate and nominal GDP.

use of per capita GDP when casually discussing french and Indian GDP figures is a sly method of shaming. If they really want a proper discussion, then include their colonial looting, and ask why so few frenchies or brits died in the two world wars as compared to Indians who actually had no dog in their fight and India's massive financial contribution as well as the contribution of other war materials like food, clothing etc'

Comparing apples to apples, we have presently overtaken the french GDP and will soon be overtaking the brits. This surely can't be a source of joy for either one of them.

Per capita GDP has its uses for sure but not in a general discussion that is taking place when we have shown that our economy is now larger than their economy and also ours is growing at a much faster rate than their economies.

In the end, it is just another unedifying dick measuring contest which they are losing to a bunch of brown skins whom they once harshly oppressed, mercilessly looted and cruelly ruled over.

How good of a predictor is the Nikkei India Purchasing Managers Index (Manufacturing)?The Nikkei PMI on July 1 was 53.1, the next will be available on August 1.Via tradingeconomics.com here is 5 years of Nikkei PMI ( > 50 means expected expansion, < 50 means expected contraction)Here is the actual manufacturing growth.

PS: in case it isn't obvious, I'm wondering about the right hand ends of both graphs, and whether the past history can tell us whether the recent downturn in manufacturing growth in the face of improving Nikkei PMI is thus temporary only.

A very subjective opinion from me.Paul Krugman in a recent article on Brexit, wrote:

One of the best-established relationships in economics is the so-called gravity equation for trade between any two countries, which says that the amount of trade depends positively on the size of the two countries’ economies but negatively on the distance between them. You can see this very clearly in British exports. Here’s British exports to selected countries as a percentage of the importing country’s GDP, plotted against the distance to that country

If you consider Pakistan-India, one has to wonder. In all those fractions of a percentage growth that keep getting shaved off for one reason or another that keep India from achieving double-digit growth, how much does this contribute I wonder.

chola wrote:Nope, I am agreeing with Yensoy that PPP is meaningless to corporate CEO or businessman because it has no relationship to the purchasing power of the population. No more, no less.

Of course it's meaningless. The entire statement is meaningless because you're talking about two different things anyway. This is a really trivial argument to take apart - no CxO type cares much about GDP, whether it's PPP, nominal or Big Mac Index. They only care about the sales potential of their product, which has no direct relationship with GDP as such. Cheen are far and away the best market to a cigarette maker, not any wealthy country with higher per capita income. Norway is the best for an EV maker. We are the best for someone selling gutka. And so on.

A_Gupta wrote:A very subjective opinion from me.Paul Krugman in a recent article on Brexit, wrote:

One of the best-established relationships in economics is the so-called gravity equation for trade between any two countries, which says that the amount of trade depends positively on the size of the two countries’ economies but negatively on the distance between them. You can see this very clearly in British exports.

That's not a 'best established relationship'. It's not even applicable to GB until recently, and is entirely because of the EU, meaning in other words that the so called 'gravity equation' is simply confusing the existence of a trading bloc for the relationship between trade volume and geographic closeness:UK historical trade statistics - see Sec 2.2Of course trade bloc are often created between geographically close nations, but they need not be - TPP would have been a collection of disparate entities, and the above data shows that in 1960, British trade ties were US + commonwealth centric.

Suraj wrote:...no CxO type cares much about GDP, whether it's PPP, nominal or Big Mac Index. They only care about the sales potential of their product, which has no direct relationship with GDP as such...

Actually, GDP and GDP growth are both great indicators of what the size of certain markets should be, for instance transportation, infra, financials and IT spending. One measure I have heard talked about is that for GDP growth to be x%, finance sector has to grow at 4x%. In the IT spend case, GDP and GDP growth is absolutely used to predict the potential market size and drives business decisions. In what I have seen, PPP is not mentioned. Of course when it comes to products of a personal nature - food, medicine/medical care, education, PPP would be a factor but then my impression is that these would pivot around average incomes, i.e. per-capita numbers which is what this argument is about anyway. That's all from me on this.

They aren’t anywhere close to useful to a business trying to sell particular goods. Saudi Arabia having a larger GDP than some Baltic state does not imply they’re a bigger vodka market, for example . Any businessperson with sense would look solely at the potential to sell their own wares profitably . Any number of other concerns, from local buying customs, to tariff structure matter far more than any GDP measure does.

Chola, your example itself is erroneous. A car has imported components and commodities. I said domestic consumption e.g. is every Chinese and every Indian able to buy chicken once a week, travel by train for 1000 kms once a year, take a vacation within India, once a year, eat at a restaurant once a week, etc. All these are dependent on PPP.

https://arxiv.org/pdf/1304.3252.pdfAbstractJan Tinbergen, the first recipient of the Nobel Memorial Prize in Economics in 1969, obtained his PhD in physics at the University of Leiden under the supervision of Paul Ehrenfest in 1929. Among many achievements as an economist after his training as a physicist, Tinbergen proposed the so-called Gravity Model of international trade. The model predicts that the intensity of trade between two coun- tries is described by a formula similar to Newton’s law of gravitation, where mass is replaced by Gross Domestic Product. Since Tinbergen’s proposal, the GravityModel has become the standard model of non-zero trade flows in macroeconomics.

India’s exports have increased by 17.57 per cent to $27.7 billion in June, Deccan Herald has reported.

However, trade deficit too has increased to $16.6 billion, due to costlier crude oil imports. Imports increased to $44.3 billion in June. Oil imports increased by 56.61 per cent to $12.73 billion during the month.The deficit is the highest since November 2014.

Gold imports reduced by three per cent to $2.38 billion.

In the first quarter this year, exports increased to $82.47 billion. Major exporting sectors which have contributed to the increase include pharmaceuticals, engineering goods, petroleum products, gems and jewels.

No one on this forum or GOI claimed that India had surpassed France in per capita GDP just because it has over taken France in total GDP. I was hoping for some new insights but the moment I reached that *rudali* point I quit.

So what is this fart about? Seriously.

Everytime India reaches a new milestone we see a new round of moharram to put it mildly. This has become the new defining character of *educated* Indians.

"In the first 40 years of independence, the country hardly grew at 3.5 per cent and today, 7-8 per cent is the norm. Good days are ahead and lot of good work is happening in the economy which is on a stage of take off where Indians can legitimately hold their heads high, that is the challenge. That is also the opportunity, " Economic Affairs Secretary Subhash Chandra Garg said today.

He was speaking at a function to mark the platinum jubilee celebrations of the Institute of Cost Accountants of India.

"Eight per cent growth is very much achievable... If we keep that... we can look forward to be an Indian economy of $10 trillion which would be the third largest economy in the world," Garg said.

To give a boost to cashless transactions in the country, the NPCI, after the delay of over a year, will launch the upgraded version of the Unified Payment Service (UPI) platform, UPI 2.0, this week. Though the latest UPI version will be loaded with features like auto debit and double transaction limit, etc., the Reserve Bank of India's decision to withhold 'Standing Instruction' feature could be a dampener.

in UPI 2.0, the NPCI could increase the transaction limit to Rs 2 lakh from the current Rs 1 lakh.

new version could allow businessmen to link overdraft accounts, a flexible borrowing facility on a bank current account, with UPI.

The new upgrade could also allow merchants to refund money without making a new transaction.

The UPI 2.0 will facilitate you with an invoice option as you make a payment through UPI, boosting transparency and seamless transactions.

(IMF) has cut India’s growth forecast by 10 basis points to 7.3% for the current year and by 30 basis points to 7.5% for 2019, citing faster-than-anticipated monetary tightening and higher crude prices.

Please be careful about posting opinion pieces from newly founded startups with an agenda. ThePrint is simply a new editorial venture of Shekhar Gupta.

No further discussion on the antecedents of the source, and no further references to them, please. Bloomberg articles can be quoted directly from them. I've removed the links to that site so we don't give them click throughs.

nandakumar wrote:If you include inward remittances, we might actually see a current account surplus in 2018-19.

So the rupee will rise? Why is it falling now?

Ripper has only depreciated against USD and USD dollar denominated currencies. USD is now particularly strong against all world currencies. We are in fact making sure it is around 10 with the RMB. Compare with say August 2013 and Indian Rupee against currencies other than USD like Euro GBP AuS dollar S.A. rand , Can Dollar, Asean countries etc you would see Ruppee has in fact appriciated against these currencies.

Add to it money received through FDI and foreign portfolio investment, we therefore have a net surplus in our total foreign transactions, which is also the reason behind our large forex reserves. Now we do devalue our currency but only to remain competitive with our peers.

Jits wrote:Add to it money received through FDI and foreign portfolio investment, we therefore have a net surplus in our total foreign transactions, which is also the reason behind our large forex reserves. Now we do devalue our currency but only to remain competitive with our peers.

The Fugitive Economic Offenders Bill aimed at preventing culprits from evading the legal process and fleeing the country was today passed by the Lok Sabha, as the opposition questioned the goverment’s sincerity in taking any action against them.

The House later passed the legislation by a voice vote as Finance Minister Piyush Goyal said the government had brought an ordinance before introducing the bill in Parliament which reflected its “aggressiveness” in acting against black money and such offenders.

Goyal also asked why the UPA government had not brought a legislation like this. He said the Fugitive Economic Offenders Bill 2013 gave power to the agencies to seize properties which are not only in the name of offender, but also the ones that are ‘benami’.